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Issue

The PCAOB (the board that oversees audits of public companies) is rethinking how it creates and updates its rules. It's seeking input on how to modernize its process, handle new technology like AI, work better with international standards, and decide when new rules are actually needed.

Our Position

The PICPA supports a modernized, principles-based approach to PCAOB standard setting — one that improves audit quality while keeping audits focused on their intended scope. Rather than tackling many large projects at once, the PCAOB should take a disciplined, evidence-based approach that prioritizes transparency, alignment with international standards, scalability, and meaningful engagement with the profession throughout the process.

Specifically, we believe the PCAOB should:

• Set clear ground rules before writing new standards. The PCAOB should adopt a formal framework that spells out the purpose of each project and judges every standard against consistent criteria, such as whether it's clear, workable, scalable, adaptable to different technologies, and enforceable. This framework should also protect auditors' ability to use professional judgment, rather than pushing audits toward rigid checklists.
• Align with international standards unless there's a good reason not to. The PCAOB should only depart from international standards when U.S. law requires it or there's a clear investor-protection reason. Closer alignment would reduce complexity and cost, improve audit quality, support new technology, and make it easier for smaller firms to enter the public company audit market.
• Modernize standards to support innovation and emerging technologies. Before writing new rules, the PCAOB should first try guidance and pilot programs to see where real problems exist, and only create formal standards once a genuine gap is confirmed. Any standards should work across different technologies rather than lock firms into one approach.
• Involve the profession earlier and more often. The PCAOB should gather input through roundtables and pilot or field testing before finalizing major changes, and should size comment periods and implementation timelines to match how big and complex each project actually is.
• Back major changes with solid cost-benefit analysis. Significant projects should include a real look at implementation costs, expected benefits, and effects on smaller firms and market competition. Smaller, routine updates don't need this same level of analysis.
• Refrain from rewriting a standard when the problem is how it's being applied. Before revising existing rules the PCAOB should first determine whether the issue is really about implementation, changing conditions, or expectations that go beyond what an audit is meant to cover. Often, added guidance solves the problem without a full rewrite.

Bottom line: the PICPA believes the PCAOB can best protect investors through a transparent, evidence-based approach that stays aligned with international standards, supports professional judgment, avoids unnecessary regulatory burden, and keeps the audit profession competitive and open to firms of all sizes.

Read the PICPA comment letter on PCAOB No. 2026-005 - Standard Setting - Aug. 5, 2026